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Cloud [144]
2 years ago
6

A U.S. firm holds an asset in Great Britain and faces the following scenario:

Business
1 answer:
Lady_Fox [76]2 years ago
3 0

Answer:

C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.

Explanation:

given data

                     State 1           State 2               State 3

Probability      25%            50%                      25%

Spot rate      $ 2.50 /£    $ 2.00 /£            $ 1.60 /£

P*                   £ 1,800       £ 2,250             £ 2,812.50

P                     $4,500          $4,500               $4,500

solution

company holds portfolio in pound. so to get hedge, they will sell that of the same amount.

we get here average value of the portfolio that is

The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)

The average value of the portfolio = 2278.13

so correct option is C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.

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26 Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide to hedge your position by selling Japanes
Nostrana [21]

Answer:

$47,500

Explanation:

The computation of the dollars amount received for the 5,000,000 yen is shown below:

= Expected yen receivable × forward rate

= 5,000,000 × $.0095

= $47,500

To find out the dollar amount we multiply the Expected yen receivable  with the forward rate so that accurate value can come. And, we ignored the current spot rate and the turns out spot rate

4 0
2 years ago
An investment pays $400 in one year, X amount of dollars in two years, and $500 in three years. The total present value of all t
k0ka [10]

Answer:

X = 789.70

Explanation:

we solve for X considerign each deposit is discounted at the given rate using the lump sum formula:

\frac{Maturity}{(1 + rate)^{time} } = PV

\frac{400}{1.06}+\frac{X}{1.06^2}  +\frac{500}{1.06^3} = 1,500\\X= (1,500 - \frac{400}{1.06} - \frac{500}{1.06^3}) \times 1.06^2

X = 789.7018868

6 0
2 years ago
During the recession witnessed in early 2001, many firms laid off their employees and downsized. the reason for this decrease in
nevsk [136]
<span>During the recession witnessed in early 2001, many firms laid off their employees and downsized. The reason for the downsizing of employees from these firms in 2001 was the incompetency and poor performance of the employees. It may sound mean but to the company, this is advantageous since they can reduce the costing while at the same time maintain or increase the final goods.</span>
4 0
2 years ago
When Coca-Cola determines the bottled-water competitors for its Dasani brand by identifying the products or sets of products wit
GarryVolchara [31]

Answer: Category membership

Explanation:    

 According to the given question, the given situation is basically determining the dasani's category membership as it helps in categorizing the various types of products and the services on the basis of their similar features and the characteristics.

The main purpose of the category membership is that it helps in understanding the various types of offers related to the specific brand and also the high competitive choice.

The customers basically wanted the product at lower price with high quality and they usually prefer the discount offers. Therefore, Category membership is the correct answer.  

   

4 0
2 years ago
Justin signed a finance agreement for his recent purchase.what is the collateral for his loan?
gayaneshka [121]

Answer:

According to the guarantees, the following types of loans can be distinguished:

-Loans with personal guarantee.

-Loans with real collateral.

-Home-backed loans.

Explanation:

The loans with personal guarantee the borrower recognizes the whole of his patrimony, be it the goods and the present and future rights in a general way. In the case of loans with collateral, a specific asset or right is together with the payment of the loan in the event that the borrower cannot pay the obligations contracted.

The fundamental modality is that of loans with a mortgage guarantee, in which the guarantee is a property. In this way, the loan installments are not met. The mortgage, which to be acts as a burden that is associated with the property, in such a way that, if someone obtains the property on which they have a mortgage, they could lose their property if the debt is not paid.

3 0
2 years ago
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